Quit happens: when resignation isn’t really a choice

The term “constructive unfair dismissal” often crops up when employees feel mistreated at work, be it due to poor management, a toxic culture or unreasonable demands. While it may seem like a legal catch-all for unhappy employees, unknown to many (although perhaps unsurprisingly), the legal position is much more complex than an aggrieved employee simply resigning and pursuing a claim through the Employment Tribunal.

In reality, an employee must satisfy a four-part legal test to succeed in a claim for constructive unfair dismissal. Let’s take a look at each stage in turn: some are relatively straightforward, while others are less so.

Part 1 – Qualifying Service

This is the simplest part of the test and will come as no surprise to most. In order to bring a claim for constructive unfair dismissal, an employee must have at least two years’ continuous service with their employer.

That said, this requirement is about to change under the proposed Employment Rights Bill – watch this space!

There are also exceptions to the qualifying service rule if the employee is alleging automatically unfair constructive dismissal e.g. that the employer acted the way it did because the employee carried out a protected act such as whistleblowing.

Part 2 – A Fundamental (or Material) Breach of Contract

The next hurdle is more involved. The employee must show that the employer has committed a fundamental (or material) breach of contract, entitling the employee to resign in response.

Examples of breaches which may be considered to be fundamental (or material) include:

• A wage reduction,
• The removal of contractual benefits (e.g. a company car),
• A unilateral change in job duties or working hours,
• Altering the employee’s employment status or protections without consent,
• A significant change in the employee’s working hours (e.g. a requirement to switch from working night shifts to day shifts).

The legal threshold is high: the breach must go to the core of the employment contract.

As well as the express terms of an employment contract, some terms are commonly implied into the contract, including the duty not to destroy the relationship of trust and confidence. Employees and employers alike must not, without reasonable or proper cause, act in a manner calculated or likely to destroy or seriously damage that relationship.

This can be breached either by:

• A single act which strikes at the heart of the employment relationship, or
• A series of actions or omissions that gradually erode trust, ultimately leading to what’s known as a “last straw”.

To prove a breach of the implied term of trust and confidence, the employee must show, firstly, that there was no reasonable and proper cause for the employer’s conduct and, secondly, that the conduct was calculated or likely to destroy or seriously damage trust and confidence.

If an employee resigns as a result of a series of actions culminating in a ’last straw’, the effect of the employer’s conduct taken as a whole could be considered a breach of the implied term of trust and confidence which would entitle the employee to resign and raise a claim for unfair constructive dismissal. Importantly,  the last action of the employer might not itself be a material breach, or even a breach at all, but could be a last straw and amount to a material breach taking earlier issues into account.

Part 3 – The Breach Caused the Resignation

The next element of the test requires that the breach caused the employee to resign. It is not sufficient for the employee to feel aggrieved or treated “unfairly”. The conduct in question must be such that the employer has made it clear (usually by actions rather than words) they no longer intend to be bound by the employment contract. It is also important to note, although perhaps obvious, that no constructive dismissal can occur unless the employee accepts the breach by resigning. This decision lies solely with the employee, and there may be other, less drastic alternatives available in some cases.

Typically, we would expect the resignation to be closely linked to a specific act or omission by the employer, and for it to be tendered without notice. This affirms the notion that the breach of contract by the employer was so serious that the employment relationship could not continue. That said, resignation with notice does not automatically defeat a claim, although it may make it harder to prove that the breach was serious enough to warrant leaving should the claim end up before an Employment Tribunal.

Part 4 – No Delay Before Resigning 

Finally, timing is crucial. The employee must resign in response to the breach or ‘last straw’. A significant delay between the breach and resignation may be taken as affirmation of the contract, resulting in a lost right to claim constructive dismissal.

Although the passage of time is a critical factor, case law has made it clear that the question of affirmation is one which concerns the employee’s conduct – not just the length of time between the alleged breach and resulting resignation. The question tribunals will ask is: has the employee, by their actions, shown an intention to continue the employment relationship?

Importantly, the law recognises that resignation is a serious step, particularly when financial or career consequences are involved. Factors such as whether the employee was at work or on sick leave, whether they had made a complaint or raised a grievance prior to resigning will all be relevant.

The key point is that the employee’s conduct must not suggest a willingness to continue working in spite of the employer’s conduct – timing is often indicative of this but not the only factor that will be considered.

Conclusion: High Standards and Practical Realities

Constructive unfair dismissal claims are, in practice, very difficult to prove. The legal test is stringent, and even establishing a prima facie claim can be a challenge. Added to this is the fact that many claims are relatively low in value, as compensation is generally limited to financial loss and employees are expected to mitigate their losses by seeking alternative employment.

The upshot? Resigning and pursuing a claim for constructive unfair dismissal is rarely the most effective route for an employee. More often than not, less drastic and less litigious options—such as raising a grievance or negotiating a managed exit—are likely to produce more desirable and cost-effective outcomes for everyone concerned.

For Employers: Be Proactive, Not Reactive

For employers, the risk of a constructive unfair dismissal claim should not be taken lightly. Even where a claim is ultimately unsuccessful, the time, cost, and disruption of tribunal proceedings can be significant.

To avoid disputes:

• Maintain open lines of communication,
• Act promptly and fairly when issues arise,
• Ensure managers understand the importance of consistent and respectful conduct,
• Document key decisions and ensure any significant changes to working conditions (contractual or otherwise) are agreed.

If in doubt, seek advice early. A proactive approach can make the difference between a resolved issue and a costly claim.

This update contains general information only and does not constitute legal or other professional advice.